Motor racing: Payments from Liberty to F1 teams slid further in 2018

LONDON (Reuters) - Formula One teams received less money from commercial rights holders Liberty Media for the second year in a row in 2018 despite a rise in the sport’s revenues, according to annual results published on Thursday.

Total payments to the 10 teams fell to $913 million from $919 million in 2017 and $966 million in 2016.

Although the Formula One Group reported an increase in annual revenues to $1,827 million, up $44 million from a previous $1,783 million, the operating loss grew from $37 million to $68 million.

Primary Formula One revenue from race promotion fees, broadcasting fees and advertising and sponsorship was stable despite an increase from 20 to 21 races, with other F1 revenue showing 13 percent growth.

“Race promotion revenue increased modestly primarily due to contractual increases in race promotion fees, as well as a contract amendment for one event,” Liberty said.

“This contract amendment was neutral for total Primary F1 revenue.

“In addition, race promotion revenue in 2018 was impacted by the calendar variance, with the non-occurrence of the Malaysian Grand Prix in 2018 not fully offset by the return of two European races in France and Germany.”

U.S.-based Liberty said advertising and sponsorship revenue had decreased for the full year.

The growth in other F1 revenue was due primarily to higher logistics revenue, digital media and TV production related revenue as well as fan engagement activities.

Liberty, who took over the sport in 2017 and ousted former commercial supremo Bernie Ecclestone, said the bigger operating loss reflected increased expenditure on the business.

“Cost of F1 revenue increased primarily due to logistics and travel expense, higher costs associated with providing the chassis and component parts to F2 and GP3 teams, digital media development and spend on fan engagement, which more than offset reduced team payments,” it added.

Formula One chairman Chase Carey told analysts in a conference call that Liberty remained committed to the sport.

“For 2019, the drivers of revenue are clear, cost growth will abate and we expect leverage to decline significantly,” he said.

“We remain firm in our commitment to growing this business in creating value for the long term for the teams, our partners, Formula One and our shareholders.”

Liberty CEO Greg Maffei also emphasised that point.

“We are very pleased with the progress that Formula One has made over the last two years. We are confident the tremendous potential still exists,” he said. “We are committed to the F1 business.”